1 Oct 2013 07:00
Scotgold Resources Limited
Re: Annual Report for the year ended 30 June 2013
Scotgold Resources Limited ("Scotgold" or "the Company") (ASX:SGX) (AIM:SGZ) announces its final results for the year ended 30 June 2013. The Company's full annual report for the year to 30 June 2013 is now available on the Company's website and will be posted to shareholders shortly. The financial information set out within this announcement is not the audited results but has been extracted from them . In addition to the audited financial results for the year, the Annual Report contains an Operational Review that is based on the operational updates that have been made by Scotgold and contains no new material information.
For further information please contact:
United Kingdom:
Scotgold Resources Limited | Westhouse Securities Limited | Bankside Consultants |
John Bentley (Chairman) Tel: +44 (0)77 8592 1505 Chris Sangster (CEO) | Richard Baty/Martin Davison | Simon Rothschild |
Tel: +44 (0)77 2562 9509 | Tel: +44 (0)20 7601 6100 | Tel +44 (0)20 7367 8888 |
Australia:
Professional Public Relations | |
Belinda Newman | |
Tel: +61 (8) 9388 0944 Mobile: +61 (0) 401 802 210
|
Chairman's Statement
Dear Shareholders,
During the first nine months of the financial year for your Company up until the middle of April, considerable progress was made on all fronts in preparing the Cononish gold and silver project for development and on the financing of that development.
An infill drilling programme was completed with a total of 18 holes being drilled into the Cononish ore body with the objective of converting inferred resources to measured and indicated in order to provide greater confidence to both prospective debt and equity providers. The results of the drilling campaign exceeded expectations, with a total of 27.6k ozs being added to measured and indicated resources and an increase of 16% to the resource blocks impacted by the infill drilling, thereby demonstrating the robustness of the resource numbers and giving encouragement that the grade of the inferred resources may be higher than the current JORC numbers.
Progress was also made with fulfilling the detailed conditions attached to the planning consent. Since the year end all submissions have been made and the majority have been discharged or are awaiting discharge. These conditions included all third party consents from Network Rail, the Forestry Commission and the Scottish Environmental Protection Agency.
In addition, detailed preparatory work was undertaken by AMEC Earth and Environmental, the tailings dam consultant, with a view to being ready to start the development of the mine in Q4 2013 whilst discussions with Consulmet, the metallurgical plant contractor, were advanced to the stage where detailed contract negotiations could take place.
The above work was brought together in the final Development Study which was undertaken by AMC Consultants UK Limited and published in early April. Details of its positive findings are given under the CEO's report in the Annual Report which can be found on the website.
On the financing side, agreement in principle was reached with RMB Resources Ltd ("RMB") for RMB to provide a gold prepayment facility amounting to $12.2m including a $4.5m overrun facility, this while the price of gold was $1,612/oz.
Thus everything was in place by early April for an equity placing to finance the development when almost overnight the gold price declined rapidly from around $1,600/oz to $1,300/oz resulting in a total withdrawal of investors from any new equity raisings in the sector. It was clear that financing would be unobtainable in the short term particularly as the debt capacity fell sharply on the back of the fall in gold price and your board immediately put in place various measures to cut ongoing costs and to seek alternative routes to financing the project.
The Board's priority remains the preservation of stakeholders' interest and the development of the Cononish mine. Since the financial year end the Company has closed a small equity placement with a potential strategic partner and the board is actively pursuing further financing. In December 2013 the Company's existing £1.5m loan facility with RMB is due for repayment and the board is actively working with RMB to evaluate the options available to move the Company and primarily the Cononish project forward to all stakeholders' benefit.
The Cononish gold and silver project, although small by international standards, has the ability to provide a post tax 23% rate of return at $1,300/oz which is at the lower end of the current trading range for gold and, importantly, it has all the consents necessary to allow it to be in production within 18 months of development financing being secured.
John Bentley
Chairman
30 September 2013
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
CONSOLIDATED | ||||
2013 | 2012 | |||
$ | $ | |||
Revenue | 15,454 | 29,124 | ||
Administration costs | (354,575) | (393,551) | ||
Interest expense | (103,350) | - | ||
Depreciation and loss on disposal of fixed assets | (26,234) | (25,165) | ||
Employee and consultant costs | (371,000) | (407,100) | ||
Listing and share registry costs | (139,262) | (135,796) | ||
Legal fees | (58,450) | (185,046) | ||
Borrowing costs | (266,426) | - | ||
Share based payments | (910,000) | - | ||
Office and communication costs | (156,322) | (152,547) | ||
Other expenses | (281,132) | (69,643) | ||
LOSS BEFORE INCOME TAX EXPENSE | (2,651,297) | (1,339,724) | ||
Income tax benefit | 67,896 | 74,551 | ||
LOSS FOR THE YEAR | (2,583,401) | (1,265,173) | ||
Other Comprehensive Income | ||||
Items that may be reclassified to Profit or Loss | ||||
Exchange loss on translation of foreign subsidiaries | 680 | (1,662) | ||
Comprehensive result for the year | (2,582,721) | (1,266,835) | ||
Basic loss per share (cents per share) | 1.23 | 0.67 | ||
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
CONSOLIDATED | ||||
2013 | 2012 | |||
$ | $ | |||
CURRENT ASSETS | ||||
Cash and cash equivalents | 570,253 | 72,615 | ||
Trade and other receivables | 26,050 | 46,731 | ||
Other current assets | 24,618 | 20,369 | ||
Total Current Assets | 620,921 | 139,715 | ||
NON CURRENT ASSETS | ||||
Trade and other receivables | 83,222 | 76,923 | ||
Plant and equipment | 144,487 | 170,721 | ||
Mineral exploration and evaluation | 13,348,454 | 12,084,602 | ||
Total Non Current assets | 13,576,163 | 12,332,246 | ||
TOTAL ASSETS | 14,197,084 | 12,471,961 | ||
CURRENT LIABILITIES | ||||
Trade and other payables | 331,085 | 227,147 | ||
Other current liabilities | 119,286 | 127,243 | ||
Interest bearing liabilities | 2,607,455 | - | ||
TOTAL LIABILITIES | 3,057,826 | 354,390 | ||
NET ASSETS | 11,139,258 | 12,117,571 | ||
EQUITY | ||||
Issued capital | 16,766,418 | 16,079,010 | ||
Reserves | 871,648 | (46,032) | ||
Accumulated losses | (6,498,808) | (3,915,407) | ||
TOTAL EQUITY | 11,139,258 | 12,117,571 | ||
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2013
CONSOLIDATED
Issued Capital | Accumulated Losses | Options Reserve | Foreign Currency Translation Reserve | Total Equity | |
Year Ended 30 June 2012 | $ | $ | $ | $ | $ |
Balance 1 July 2011 | 14,299,263 | (2,650,234) | - | (44,370) | 11,604,659 |
Rights Issue | 1,409,081 | - | - | - | 1,409,081 |
Rights Issue Shortfall allocation | 203,963 | - | - | - | 203,963 |
Option exercise | 214,747 | - | - | - | 214,747 |
Share issue expenses | (48,044) | - | - | - | (48,044) |
Total comprehensive result for the year | - | (1,265,173) | - | (1,662) | (1,266,835) |
As at 30 June 2012 | 16,079,010 | (3,915,407) | - | (46,032) | 12,117,571 |
Year Ended 30 June 2013 | $ | $ | $ | $ | $ |
Balance 1 July 2012 | 16,079,010 | (3,915,407) | - | (46,032) | 12,117,571 |
Placement | 727,515 | - | - | - | 727,515 |
Options issued | - | - | 917,000 | - | 917,000 |
Share issue expenses | (40,107) | - | - | - | (40,107) |
Total comprehensive result for the year | - | (2,583,401) | - | 680 | (2,582,721) |
As at 30 June 2013 | 16,766,418 | (6,498,808) | 917,000 | (45,352) | 11,139,258 |
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
CONSOLIDATED | ||||
2013 | 2012 | |||
$ | $ | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Payment to suppliers | (1,184,916) | (1,273,624) | ||
Interest income received | 8,751 | 28,951 | ||
Net Cash Outflow From Operating Activities | (1,176,165) | (1,244,673) | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Payments for exploration expenditure | (1,263,995) | (1,391,102) | ||
Payment for other fixed assets | - | (22,769) | ||
Net Cash Outflow From Investing Activities | (1,263,995) | (1,413,871) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from issue of shares and options | 727,515 | 1,827,791 | ||
Share and option issue transaction costs | (40,107) | (48,044) | ||
Borrowings net of costs | 2,230,245 | - | ||
Net Cash Inflow From Financing Activities | 2,917,653 | 1,779,747 | ||
Net decrease/(increase) in cash held | 477,493 | (878,797) | ||
Effect of exchange rate fluctuations on cash and cash equivalents | 20,145 | 744 | ||
Cash and cash equivalents at the beginning of this financial year | 72,615 | 950,668 | ||
Cash and cash equivalents at the end of this financial year | 570,253 | 72,615 | ||
NOTES
1. The full annual report is now available on the Company's website and will be posted to shareholders shortly. The information set out within this announcement is not the audited results but has been extracted from the Annual Report and Accounts.
2. MINERAL EXPLORATION AND EVALUATION | ||
Opening balance | 12,084,602 | 10,526,320 |
Expenditure during the year | 1,263,852 | 1,558,282 |
Closing balance | 13,348,454 | 12,084,602 |
The ultimate recoupment of exploration expenditure carried forward is dependent upon successful development and commercial exploitation, or sale of the respective areas.
3. INTEREST BEARING LIABILITIES
Financing Agreements
On 2 July 2012 the company announced that an agreement had been reached with RMB Resources for a £1.18m financing facility. This facility is a convertible loan structured as a secured corporate loan with share options which provides for RMB to acquire 26,222,222 Scotgold shares at £0.045.
On 4 December 2012 the company announced that an agreement had been reached with RMB Resources to extend the £1.18m financing facility by £0.32m to £1.50m. Funds were advanced on 9 April 2013 and options for RMB to acquire a further 7,111,111 Scotgold shares at £0.045 were issued on that date.
The facility is repayable, together with capitalised interest, on 31 December 2013.
Interest is charged at average LIBOR three months rate plus 5% for the first facility of £1.18m and at average LIBOR three months rate plus 9.5% for the extension of £0.32m.
The loan is secured over the shares in the subsidiary company Scotgold Resources Limited (SC 309525) together with a floating charge over the assets of that company.
The facility is fully drawn down at 30 June 2013 in the amount of £1,500,000.
The carrying value of the assets pledged as security is $13,462,030 at 30 June 2013.
An undertaking of the facility agreement was to raise additional equity funds no later than 15 May 2013. The company is in breach of this undertaking.
4. LOSS PER SHARE
2013 | 2012 | |||
Number | Number | |||
Weighted average number of ordinary shares outstanding during the year used in the calculation of basic loss per share | 210,642,576 | 189,392,568 |
There are no potential ordinary shares on issue at the date of this report.
5. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
On 12 September 2013 the Company announced it had agreed to issue 10 million fully paid ordinary Scotgold shares to Zio Holdings Ltd (Company No. 077015) a company incorporated in Mauritius (Zio), at an issue price of AUD$0.02 each to raise AUD$200,000.
Additionally, Scotgold agreed to give Zio a non-exclusive right to conduct due diligence enquiries into Scotgold and the Cononish Project with a view to Zio making further investments in Scotgold, subject to any relevant shareholder or regulatory approvals.
There are no other matters or circumstances that have arisen after the balance date that have significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future periods.